Question

Which of the following would be the initial effect of an individual making a $10,000 cash deposit in a bank?

a. The money supply would rise by $10,000.
b. The money supply would fall by $10,000.
c. The money supply would not be affected by the deposit.
d. The money supply would fall, but by less than the $10,000 deposit.

Answer 1

C. The money supply would not be affected by the deposit

Explanation: The person depositing has the same amount of money regardless in cash or in his bank, so it wont be affected.